Asian Stocks Decline Following Wall Street Losses
HONG KONG (AP) – Asian markets took a dip on Friday, reacting to substantial losses seen on Wall Street, where a sell-off in technology stocks raised investor concerns about potential ramifications.
U.S. futures also showed slight declines, with the S&P 500 futures index dropping by 0.2%, mirroring a similar decrease in the Dow Jones Industrial Average futures index.
In Tokyo, the Nikkei Stock Average fell 1.2%, closing at 56,941.97 yen. Notably, SoftBank Group, which focuses on AI, observed an 8.9% decline, despite reporting a quarterly profit of $1.6 billion.
Meanwhile, South Korea’s Kospi index dropped 0.3% to 5,507.01, although Samsung Electronics saw a small gain of 1.5% as the largest listed firm in the country.
Hong Kong’s Hang Seng fell by 1.7%, settling at 26,575.84. The Shanghai Composite Index declined by 1%, closing at 4,091.65.
In Australia, the S&P/ASX 200 was down 1.4%, trading at 8,917.60.
Wall Street had a rough Thursday, with investor sentiment taking a hit due to AI-related worries. The S&P 500 suffered its second worst performance since Thanksgiving, decreasing 1.6% or 108.71 points, to 6,832.76, though it remains close to its recent highs. The Dow Jones Industrial Average fell 1.3%, losing $669.42 to settle at $49,451.98, while the Nasdaq Composite saw a sharper decline of 2%, dropping 469.32 points to 22,597.15.
Concerns around Cisco Systems, a major player in tech, led to a 12.3% drop in its shares, despite the company reporting earnings that exceeded expectations. Similarly, AppLovin’s shares plummeted 19.7%, as fears about AI’s potential negative impact lingered around its business, even though it reported better-than-expected quarterly profits.
This unease regarding AI’s disruptive potential seems pervasive across the industry recently, affecting investor confidence, especially in software stocks. Analysts note that uncertainties related to AI disruption will likely persist. There are ongoing worries about whether the substantial investments in AI by these companies will ultimately yield significant benefits.
However, not all outlooks are bleak. Some economists, like those at Capital Economics, express a more optimistic view, suggesting that the ongoing rise of AI will play a beneficial role this year, contributing positively to the S&P 500 backed by technology-driven gains.
Thomas Matthews, head of Asia-Pacific markets at Capital Economics, mentioned in a recent note that a substantial decline in the technology sector would be necessary for a sustained downturn in tech performance. He seems to maintain a positive outlook regarding technological advancements.
On a different note, some U.S. stocks had a good day, with McDonald’s climbing 2.7% thanks to better-than-expected profits. Walmart also increased by 3.8%.
Investors are attentively awaiting U.S. inflation data set to be released on Friday, which might impact the Federal Reserve’s interest rate decisions. Some economists indicate that additional rate cuts are unlikely in the near term.
